Dave Ramseyhttp://www.businessinsider.com/category/dave-ramsey
en-usSun, 02 Aug 2015 16:39:29 -0400Sun, 02 Aug 2015 16:39:29 -0400The latest news on Dave Ramsey from Business Insiderhttp://static3.businessinsider.com/assets/images/bilogo-250x36-wide-rev.pngBusiness Insiderhttp://www.businessinsider.com
http://www.businessinsider.com/dave-ramseys-daughter-dishes-on-life-with-a-financial-guru-2014-4Dave Ramsey's Daughter Dishes On Life With A Financial Guruhttp://www.businessinsider.com/dave-ramseys-daughter-dishes-on-life-with-a-financial-guru-2014-4
Wed, 30 Apr 2014 11:21:00 -0400Emma Johnson
<p><img style="float:right;" src="http://static6.businessinsider.com/image/535e8e55eab8ea7f2ad4a33e-480-/dave-ramsey-interview-1.jpg" border="0" alt="dave ramsey interview" width="480" /></p><p>Rachel Cruze grew up with plenty of information about making and saving money.</p>
<p>Her dad, Dave Ramsey, is one of the best-known names in personal finance, helping millions of people get out of debt and build wealth with his best-selling books and weekly radio show.</p>
<p>Although she grew up alongside her parents&rsquo; growing affluence, Cruze, 25, says she was far from spoiled&mdash;nor did she rebel against her dad&rsquo;s strident rules about hard work, saving and admonishing debt.</p>
<p>Together, Cruze and Ramsey have written "<a href="http://www.booksamillion.com/p/Smart-Money-Kids/Dave-Ramsey/9781937077631?id=5866402304775" target="_blank" rel="nofollow">Smart Money, Smart Kids: Raising the Next Generation to Win With Money</a>"&nbsp;($15.46 at Books-A-Million), published April 22, in which they each share their early experiences with money, and how parents today can teach their children to be fiscally wise.</p>
<p>As a mom of two, I was interested in what Cruze has to say growing up with a financial-education celebrity, and what parents today can learn from her early lessons:</p>
<p><strong>When it comes to teaching kids about money, the first question is always: &ldquo;Do you pay your kids for chores?&rdquo; You and your dad have very strong opinions about that. What are your early memories about chores and allowance?</strong></p>
<p>My dad hates the word &ldquo;allowance.&rdquo; In my family, we were paid for work. That is how it is in the rest of your life. We always used the word &ldquo;commission.&rdquo; There was a formal system, which is important so there is clear communication. There was a list of chores that included feeding the dog, cleaning our rooms, unloading groceries, and dusting and vacuuming. We were each expected to complete five jobs, and each was paid $1. Sunday evening was payday, and the number of chores and dollars were tallied up.</p>
<p>We were then expected to give $1 to charity, save $2 and then spend $2. There were also chores we were expected to do simply because we were part of the family and were not paid for, like setting and clearing the table of dishes.</p>
<p><strong>That is kind of the best of both philosophies: You are paid to work, and you also work because you are expected to contribute. The bottom line is that there were no freebies in the Ramsey house. In the book, you have these great stories about how you, your sister and brother each came to have cars as teenagers.</strong></p>
<p>That&rsquo;s right. Growing up, each of us understood that whatever money we saved toward a car when we turned 16, our parents would match. For two years, I worked very hard, saved up money from babysitting and the business we started, and I saved $8,000, which my parents matched, and I was able to buy a $16,000 used BMW. I originally had my eye on a bright-yellow Nissan Xterra. But when I test-drove it, I wasn&rsquo;t so sure. I had a lot of work and emotion invested in that decision, so I took it seriously and shopped for a really good deal.</p>
<p><strong>And your brother saved $12,000, which meant he had $24,000 to spend on a car!</strong></p>
<p>Right, but my dad told him that wasn&rsquo;t appropriate for such a young person to have such an expensive car. He wasn&rsquo;t going back on his word; he just put limits on it. So many kids today have no limits, which can be dangerous in this time of materialism. And so my brother bought a Jeep, and then donated the remaining $10,000 to earthquake victims in Peru, which is pretty remarkable for a 16-year-old kid.</p>
<p><strong>Let&rsquo;s face it. Your family was affluent. Were there times when you wanted material things, but your parents put their foot down, even though you knew they could afford it?</strong></p>
<p>My mom and dad really practiced what they preached. They could have easily gone out and bought really great stuff all the time. Sometimes, they treated themselves, but they were very modest and still are. Mom cooked most of our meals, and we lived in a standard four-bedroom house.</p>
<p>When I was a teenager, I had some moments. Coach purses were really popular, and a friend had a beautiful Tiffany silver bracelet with a heart I really wanted. But the message was the same at home: You can work and save up. And so I did a lot of babysitting and saved up for those things, which of course taught me to value it even more and appreciate that a Coach purse is a lot of money. What my parents taught us was not complicated. It was a lot of common sense &mdash; even if I could not have told you that when I was 17!</p>
<p><strong>Giving back is a big theme with your father&rsquo;s teaching as well as in this book. How did your parents instill that in you growing up?</strong></p>
<p>As we like to say, &ldquo;More is caught than taught.&rdquo; I absorbed by osmosis so much by seeing how freely my parents gave their time and money, including in the offering bag at church each week. Sometimes, they talked about tithing. Other times, my parents took us along to distribute Christmas gifts to needy families. But the strongest message I received about charity was just seeing my parents drop that envelope in the offering every week. As soon as I could, I started doing the same, giving 10% of my commission or babysitting money.</p>
<p><strong>There are so many messages out there about raising kids, teaching morals and personal finance. But I see that much of what your parents taught you was simply following their lead.</strong></p>
<p>That&rsquo;s right. Maybe every few months, you show your kids how you write the check to your favorite charity, or sit them down when you do household budgeting once every six months. It doesn&rsquo;t have to be every day. It&rsquo;s more about teaching them that hard work is important and fun, and that wealth is a good thing, and that the world does not revolve around them. Children who are raised from early on to be grateful are more willing to serve. They&rsquo;re the ones who, when visiting their friends&rsquo; homes, ask, &ldquo;What can I help with?&rdquo; And when they enter the job market, they have a measure of grace and the ability to make an impact in ways that others may not. They are just more delightful.</p>
<p><strong>You are delightful. Thank you so much for your time and best wishes with the book!</strong></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/how-to-cut-your-grocery-bill-in-half-2014-4" >How One Young Professional Cut Her Grocery Bill In Half</a></strong></p>
<p><a href="http://www.businessinsider.com/dave-ramseys-daughter-dishes-on-life-with-a-financial-guru-2014-4#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/mom-erased-her-familys-89000-debt-2013-2The Extreme Plan One Mother Used To Erase $89,000 Of Debt In Six Monthshttp://www.businessinsider.com/mom-erased-her-familys-89000-debt-2013-2
Mon, 18 Feb 2013 10:38:00 -0500Lisa M. Gerry
<p><span style="line-height: 1.5em;"><img style="float:right;" src="http://static4.businessinsider.com/image/4fad311b69beddc52a00001c-400-300/mom-baby.jpg" border="0" alt="mom baby " />Six kids means more than multiplying diapers, food, clothing and toys &hellip; the dollar signs multiply as well.</span></p>
<p>Angela Coffman, of Kansas City, Missouri, one of the four subjects on the recent TLC special Extreme Cheapskates, was a stay-at-home mom of six, and in debt to the tune of $89,000.</p>
<p>Through extraordinary dedication, effort and big-time penny-pinching, she managed to pull her family up by its bootstraps and erase all that debt &hellip; in just six months!</p>
<p>Today, Coffman works from home, teaching others how to live frugally on her website, <a href="http://www.groceryshrink.com" target="_blank">Grocery Shrink</a>. We caught up with this reality TV star to talk about how she paid off that debt, and how she budgets to keep it off.</p>
<p><strong>What were you doing to acquire so much debt?</strong><br />My husband and I were living the American dream. We had several credit cards, but we mostly used one that gave us cash back on our purchases. We would put everything on it&mdash;food, clothing, all of our necessities&mdash;and then try to pay it back at the end of the month. We borrowed $20,000 to buy a car, we had put $75,000 down on a house that we were using as a rental property and borrowed $1,000 to buy a leather couch. Then my husband Darren, who&rsquo;s an accountant, lost his job, and we couldn&rsquo;t pay off the credit card any more.</p>
<p><strong>How did you become motivated to do something about it?</strong><br />I knew there was a better way to handle our money. My parents paid off our home when I was in the fourth grade, and they never borrowed money again. They really had taught me better. One day, I heard finance expert Dave Ramsey on the radio announcing a contest to win a trip to the Bahamas. You had to be one of the top ten families in the nation who paid off the most debt or saved the most money in a six-month period. About that time Darren got a new job, and I figured, even if we lose the contest but we give it our all, we&rsquo;ll end up winners. We won&mdash;and got to go on the trip.</p>
<p><strong>What did you do during those six months to save money?</strong><br />We went all out. We spent nothing that we did not have to in order to survive. We ate food that we picked from our yard, we turned off our heat and burned wood in the fireplace instead, we used cloth diapers, cloth napkins, cloth toilet paper&mdash;anything that you would usually use paper for. We hand-made gifts, I made clothes for the kids out of leftovers from garage sales that neighbors would give me. So my sons wore denim skirts &hellip; but they looked like shorts after I sewed them.</p>
<p>We decided to sell our house and wait for a time when we were financially able to support an investment like that. We sold some cattle that my husband owned, and we sold whatever else we could. We only kept $1,000 for ourselves. That was our only cushion between us and bankruptcy. The rest went to paying off debt.</p>
<p>By the end of the six months, we were completely out of debt. Three months later, we had actually saved $40,000 to put down on a new house.</p>
<p><strong>Tell me about the reusable toilet paper.</strong><br />It started when we were doing the contest, when every dime made a difference. But then we realized we liked it a lot better. I cut up squares of cloth. It&rsquo;s softer, lint free and doesn&rsquo;t tear up&mdash;it&rsquo;s fantastic. We were using cloth diapers at the time time, so we would just pour it all in the wash together. There were people who said, &ldquo;Cloth toilet paper, that&rsquo;s disgusting!&rdquo; I&rsquo;ve seen disgusting, though, and this isn&rsquo;t it. But, I realize there is a cultural line that we had crossed. I do buy a pack of toilet paper every year to keep in the guest bathroom or for backup. But the kids get really upset when there are no cloth wipes.</p>
<p><strong>How much do you think you save with the cloth wipes?</strong><br />Since we have eight people in the family, I would guess we&rsquo;re saving between $15 and $20 a month. And we&rsquo;ve been doing it since 2005.</p>
<p><strong>What other strategies do you still use today?</strong><br />We live in the country, and the nearest grocery store is 30 miles away, so I started going to the grocery store once a month to conserve gas. That was our transition to a whole new way of shopping. I started working on a pantry system. Instead of buying food for a week&rsquo;s worth of meals, I would buy a month&rsquo;s worth of food in one trip. At the time of the contest, I had three kids and my monthly food budget for the five of us was $185.</p>
<p><strong>And what is your budget today?</strong><br />We have six kids now&mdash;ages 12, 10, 8, 6, 4 and 10 months&mdash;so our monthly food budget for the eight of us is $400 total, $50 per person. We save $400 per month by shopping all at one time.</p>
<p><strong>Could you explain the pantry system?</strong><br />Over time, I built a pantry with a three- to six-month supply of food like tomato sauce, whole wheat flour and brown rice pasta. Now, when I go out for my monthly shopping trip, it&rsquo;s just for fresh items and the really good deals. When I see great deals, I stock up. I got to the point where I would never pay full price. If I see that tomato sauce is really cheap, I buy 30 cans. We won&rsquo;t use it that month, but I can store it for a year.</p>
<p>Also, I plan menus for the whole month. It gives me something to shoot for when I&rsquo;m at the store and I see deals.</p>
<p>(Want to save on food by planning ahead yourself? Check out our <a href="http://www.learnvest.com/tag/food-for-a-month/" target="_blank">Food for a Month</a> series.)</p>
<p><strong>What other thrifty tactics do you use?</strong><br />We only use cash. Every month, my husband and I work out a budget, and whatever that is, we pull it out in cash. I have a plastic coupon organizer with tabs for categories like groceries, clothing, gifts, etc. that I use to divvy up the cash. That way when I&rsquo;m at the store, I can see at a glance if I&rsquo;m over budget. When we were putting everything on credit cards, we technically had a budget, but I couldn&rsquo;t tell how close to it we were when we were at the store.</p>
<p><strong>What about for your children&rsquo;s clothes?</strong><br />Twice a year, in the fall and spring, we plan a clothing menu for every person in the family. For example, for my oldest daughter Heidi, I will write down that she needs three pairs of jeans, two church dresses, this many socks, etc. First we look through what we already have and we write that down on the menu, so we know exactly how much we&rsquo;ll need to buy for her. We start looking at garage sales, then thrift stores, then the clearance racks at high-end department stores like Dillards. Also, Old Navy has amazing clearance racks. Then, if I still haven&rsquo;t found what I&rsquo;m looking for, I&rsquo;ll look on <a class="hidden_link" href="http://www.businessinsider.com/blackboard/craigslist">Craigslist</a> and Ebay&mdash;especially if I&rsquo;m looking for something special like soccer cleats. My last resort would be to buy it new.</p>
<p><strong>On the TLC special, you used a babysitting club. Do you still do that?</strong><br />Yes, we do. We trade every other Tuesday night with another family. One week their family comes over, and I provide food for their kids. The parents have four hours to do whatever they want. And the next week it&rsquo;s our turn. It&rsquo;s fantastic. Darren and I weren&rsquo;t able to eat out because it was too expensive with the children, but now when it&rsquo;s just the two of us, we can afford it.</p>
<p><strong>Do you ever splurge?</strong><br />Last year, we took our three older children on a cruise to Mexico. We found a deal at <a href="http://vacationstogo.com/" target="_blank">Vacations To Go</a>. The tickets were $250 each for Darren and me, and the children&rsquo;s tickets were $150 each. That included a week on the cruise ship and all of our food and entertainment. It was a splurge for us, but we can only go if we find a deal like that.</p>
<p>(If Coffman&rsquo;s story intrigues you, check out the story of <a href="http://www.learnvest.com/2012/02/extreme-cheapskates-meet-jeff-and-denise-yeager/" target="_blank">one married couple</a>&mdash;and fellow Extreme Cheapskates&mdash;so frugal they managed to pay for a child not their own to attend college.)</p>
<h3>More From LearnVest</h3>
<p>Check out these <a href="http://www.learnvest.com/2012/01/10-healthy-meals-kids-will-flip-for-under-10/" target="_blank">10 healthy meals</a> your kid will flip for&mdash;all under $10 each to make.<br />Take a better family photo with these <a href="http://www.learnvest.com/2012/01/the-best-photos-how-to-take-good-ones-of-your-family/" target="_blank">easy tips and tricks</a>.<br />Need a new family budget? <a href="http://www.learnvest.com/2012/01/the-makings-of-an-updated-smart-family-budget/" target="_blank">We can help you get started</a>.</p><p><a href="http://www.businessinsider.com/mom-erased-her-familys-89000-debt-2013-2#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/dave-ramsey-defends-millionaire-retirement-formula-twitter-2013-2There Is So Much Wrong With Dave Ramsey's Formula For Becoming A Millionairehttp://www.businessinsider.com/dave-ramsey-defends-millionaire-retirement-formula-twitter-2013-2
Tue, 12 Feb 2013 23:32:00 -0500Mandi Woodruff
<p><img style="float:right;" src="http://static3.businessinsider.com/image/4f9566be69bedd6560000011-400-300/davescissors.png" border="0" alt="dave-ramsey" /></p><p><span style="font-size: 15px; line-height: 1.5em;">Personal finance guru Dave Ramsey went on a rant Tuesday afternoon against&nbsp;</span><a href="http://www.businessinsider.com/blackboard/twitter" class="hidden_link">Twitter</a><span style="font-size: 15px; line-height: 1.5em;">&nbsp;users who assailed him for promising consumers they could become millionaires by saving $100 per month.&nbsp;</span></p>
<p>It's a formula Ramsey has touted for years, but he kicked off his morning by tweeting this nugget of wisdom out to more than 300,000 followers:&nbsp;</p>
<p><strong>"Saving only $100 per month from age 25 to age 65 at 12% growth = $1,176,000. Everyone should retire a millionaire!"</strong></p>
<p>The backlash was instant and people had one main question:&nbsp;<span>How can you promise a 12 percent return on investment over a 40-year period?&nbsp;</span></p>
<p>Ramsey defended himself&nbsp;<a href="http://www.daveramsey.com/radio" target="_blank">during his live show</a>&nbsp;Wednesday, calling the theory&nbsp;<span style="font-size: 15px; line-height: 1.5em;">&nbsp;"inspirational" and "instructional." &nbsp;But for the legion of fans who eat up his every word each day, it could be the last kind of advice they need.&nbsp;</span></p>
<p>Here's where we take issue with Ramsey's defense:&nbsp;</p>
<p><strong>Ramsey: "[I use this formula] to encourage you to save. That's why I would say it, &nbsp;to encourage you to be an investor. It wasn't a political statement, although I'm not above those. It wasn't a spiritual statement, although I'm not above those. It was a mathematical formula showing that if you save money over time, you'll have some."&nbsp;</strong></p>
<p><strong>Our take:</strong>&nbsp;It's noble to want people to save. But, of course, anyone would be inspired to save if you tell them they could make a million bucks just by tucking away a small amount of cash for 40 years. The fact of the matter is that his formula relies on a 12 percent rate of investment return &ndash;&ndash; something no one in their right minds would promise for that long a time frame.&nbsp;</p>
<p><span>An August report by&nbsp;</span><a href="http://www.businessinsider.com/84-mutual-funds-underperform-2012-3" target="_blank">S&amp;P Indices</a><span>&nbsp;found more than 80 percent of actively managed U.S. stock funds underperformed the market.&nbsp;</span></p>
<p><span><span></span></span><span style="font-size: 15px; line-height: 1.5em;">Yes, Ramsey went on to say that he "didn't bring up a guarantee," later, but there no was&nbsp;</span><a href="https://twitter.com/DaveRamsey/status/301306319313461248" target="_blank">no such clarification in the original tweet</a><span style="font-size: 15px; line-height: 1.5em;">.</span></p>
<p>Why? The way Ramsey suggests earning that return is to invest in mutual funds (of course, he suggests listeners call his hotline for his personally-endorsed funds, but we'll get to that later). He says his team can point people to funds that have "lifetime track records of" 12 percent returns. We'd love to see the numbers to prove that.&nbsp;</p>
<p>According to a study published in the Journal of investing,&nbsp;<a href="http://www.stockopedia.co.uk/clicks/?url=http://www.firstquadrant.com/downloads/The_Management.pdf">75% of investment funds under-perform the stock market averages</a><span>&nbsp;over the long term. The reason? High fees, taxes and trading commissions that eat up all the profit, not that most mutual fund advisors will factor those costs into their annual return estimates. &nbsp;<span>T</span><span>he average mutual fund charges up to&nbsp;</span><a href="http://www.forbes.com/2011/04/04/real-cost-mutual-fund-taxes-fees-retirement-bernicke.html" target="_blank">3 percent of annual returns</a><span>&nbsp;for the privilege of divvying up your investments, according to <a class="hidden_link" href="http://www.businessinsider.com/blackboard/forbes">Forbes</a>.</span></span></p>
<p>That's the reason more conservative experts like&nbsp;<a href="http://www.businessinsider.com/7-ways-to-retire-a-millionaire-2012-11" target="_blank">U.S. News &amp; World Report's Kimberly Palmer</a>&nbsp;use a 7 percent ROI when calculating a millionaire retirement goal:</p>
<p><span>"If you start saving for retirement at age 25, you only have to save about $4,830 annually to reach $1 million by age 65, assuming an annual return of 7 percent after fees. If you wait until age 40 to start saving, you'll need to tuck away much more: $15,240 per year, assuming the same retirement age and annual return."</span></p>
<p><span>Note: That's a monthly savings goal of $400/month, a far cry from the "coffee a day" $100 Ramsey estimates.&nbsp;</span></p>
<p><strong><span>Ramsey: "Who could save $100 a month? People who work and stay out of debt and live on a budget. ... &nbsp;Y</span></strong><strong id="internal-source-marker_0.5200869480613619">ou would have $100 if you would cut your freaking cable bill back, stay out of the coffee shop and quit spending money you don't have on a bunch of junk."</strong><span>&nbsp;</span></p>
<p><span><strong>Our take:</strong>&nbsp;Certainly, it is possible for a lot of people to tuck away that much cash per month by rejiggering their expenditures. But what about the&nbsp;<a href="http://www.businessinsider.com/10-most-financially-unstable-states-2013-2" target="_blank">132 million Americans</a>&nbsp;who don't even have enough saved for emergencies?&nbsp;</span></p>
<p><span>We doubt they can afford luxuries like lattes and cable, let alone investing $100 in a costly mutual fund, especially given the fact that U.S. households saw their income decrease by $49,000 between 2007 and 2010, according to the NY Fed.&nbsp;</span></p>
<p><span></span><span>And the sarcastic, finger-wagging tone Ramsey uses to blast people who say they can't save is insulting and a little hypocritical &ndash;&ndash;&nbsp;<strong>Ramsey himself declared personal bankruptcy before building his personal finance empire.&nbsp;</strong></span></p>
<p><strong>Ramsey: "<span>It's simple concept in a culture that has the savings rate and financial maturity of a two-year-old. To simply put out there that maybe if you save some money you would have some blows people away.&nbsp;</span>This is why I have a job for as long as I want one.&nbsp;I will never be unemployed. Just teaching people to save money and get a bunch of money and get out of debt. Me and Jenny Craig, we got a lock for life, baby. We got enough work forever."&nbsp;</strong></p>
<p><strong>Our take:</strong>&nbsp;Apart from being completely condescending, Ramsey is basically admitting here that his entire financial empire is based on the fact that people STAY in debt and need help figuring out how to make their money last longer. Why else would they need his advice?&nbsp;</p>
<p>Here's where some financial reform would come in handy &ndash;&ndash; much handier than letting Ramsey pick your mutual funds for you, we would guess. If enough consumers truly understood financial products like 401(k)s, Roth IRAs, and investment funds, chances are they could debunk Ramsey's advice all on their own. Unfortunately, deciphering the literature is not only difficult, time consuming labor, but it's difficult for most people to even know where to start.</p>
<p><a href="http://www.businessinsider.com/helaine-olen-on-personal-finance-gurus-2013-1" target="_blank">In an interview with CBS MoneyWatch</a>, personal finance writer Helaine Olen, hit the nail on the head:&nbsp;</p>
<p>"We're nuts when it comes to money and all we want is someone to tell us what to do. Most of us don't want to engage with our money even though we need it, and so the idea is, hey, I'll just follow this person and they'll tell me what to do. We also, in this country, have a huge attraction to this sort of tough thinking about money &ndash;&ndash; where anybody can make it and it's your fault if you don't."&nbsp;</p>
<p>If you need proof this is the kind of product Ramsey is selling, take this quote from his radio show today: <strong>"I'm just reading facts to you. I've been getting 12% on my money on average for many years. ... If you don't want to save or invest because you think the future is caving in ... then don't do it. But I'm gonna go get rich and you guys can all go gripe about it."</strong></p>
<p>And lastly, this:&nbsp;</p>
<p><strong>Ramsey: "If</strong><strong id="internal-source-marker_0.5200869480613619" style="font-size: 15px; line-height: 1.5em;"> you can wander onto the internet and go buy an S&amp;P 500 index fund, which you should be able to do if you can buy your potato chips over the internet, then you can. It has a</strong><strong id="internal-source-marker_0.5200869480613619" style="font-size: 15px; line-height: 1.5em;">n average of slightly under 12% but that's an idiot-proof fund."</strong></p>
<p><strong id="internal-source-marker_0.5200869480613619">Our take:&nbsp;</strong>This is about the only thing Ramsey gets right.&nbsp;<a href="http://www.businessinsider.com/hedge-fund-sp-500-correlation-2013-2" target="_blank">Low-cost index funds have been proven</a>&nbsp;to be the financially sound choice for most investors, given the fact that they don't come with all the high fees that typically eat up returns for mutual fund investors. But then we wonder why Ramsey is trying to sell people on his endorsed mutual funds if he basically admits here that low-cost, index funds are the way to go?&nbsp;</p>
<p>We asked Mark Herber,&nbsp;<span style="font-size: 15px; color: #000000;">President of&nbsp;</span><span style="font-size: 15px; color: #000000;"><a href="http://www.ifa.com/" target="_blank">Index Funds Advisors, Inc</a>. for his take:&nbsp;</span></p>
<p style="padding-left: 30px;"><span style="font-size: 15px; color: #000000;">"W</span><span style="font-size: 15px; color: #000000;">e have never seen any client that earned these returns over the 40 years, but our simulated <strong>index portfolios</strong>, adding $100/month, starting with high risk and reducing the equity exposure by 1% per year actually came close to his calculation. &nbsp;But without passive funds, he would not even had data to make such a claim."&nbsp;</span></p>
<p><span>We reached out to Ramsey's rep for comment but haven't heard back since this afternoon.</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/10-most-financially-unstable-states-2013-2" >10 states where people are living on the edge of financial ruin > </a></strong></p>
<p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/how-i-lived-in-chile-for-just-2500-mandi-woodruff-2013-2" >How I lasted five months in South America with $2,100 > </a></strong></p>
<p><a href="http://www.businessinsider.com/dave-ramsey-defends-millionaire-retirement-formula-twitter-2013-2#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/dave-ramsey-will-help-me-get-debt-free-2012-11TRUE CONFESSION: I'm So Deep In Debt I'm Turning To Dave Ramsey For Helphttp://www.businessinsider.com/dave-ramsey-will-help-me-get-debt-free-2012-11
Wed, 28 Nov 2012 13:09:12 -0500Jennifer Calonia
<p><img style="float:right;" src="http://static5.businessinsider.com/image/50b6531e6bb3f71e1d000000/jennifer-calonia.jpg" border="0" alt="jennifer-calonia" /></p><p>Since earning my college degree, I have been searching for strategies on how to&nbsp;<a href="http://www.godebthelp.com/r/4e1dddd4ea/?subid=gbrarticle_BreakingUpwithDebt1" target="_blank" title="Get Out of Debt">get out of debt</a>, but it&rsquo;s only within the past year that I&rsquo;ve become serious about establishing a&nbsp;<strong>debt management plan.</strong></p>
<p>Why did I wait so long to get rid of my debt? As a college student, I faintly understood just how difficult paying off debt could be &mdash; to me, it was something that adults in the real world accomplished&nbsp;<em>eventually.&nbsp;</em>It&rsquo;s only now that I&rsquo;m at a point in my life where I&rsquo;d like to take the next step &mdash; homeownership, starting a family, grow a retirement fund &mdash; that I&rsquo;ve come to terms with just how difficult getting out of debt can be.<span id="more-231390"></span></p>
<h2>Taking Debt Too Lightly</h2>
<p>My misadventures with&nbsp;<a href="http://www.gobankingrates.com/debt/" title="Debt">debt</a>&nbsp;started off rather innocently with student loans.</p>
<p>To help me live &ldquo;comfortably&rdquo; while in school, I accepted the maximum student loan amount I was offered every year. I only ever needed about a third of my loans for books and supplies, but I justified the extra cash as &ldquo;pocket money&rdquo; that wouldn&rsquo;t accrue interest until I graduated, nor had to be repaid for another four years anyway.</p>
<p>&ldquo;Practically free money!&rdquo; I&rsquo;d say.</p>
<p>At 18-years-old, I knew very little about loans, but I signed on the dotted line nonetheless. I accepted the funds, and went about my business. I didn&rsquo;t realize how deep in student loan debt I really was in until I graduated.</p>
<h3>College Credit Cards</h3>
<p>Interestingly enough, I grew up being lectured about how tempting and dangerous credit cards could be. It&rsquo;s for that reason that I avoided credit card applications in my first few months as a college freshman.</p>
<p>At the time, my mailbox was flooding with endless credit card offers from major creditors. I never opened them, distrustful of their alluring offers and marketing tactics. But in my sophomore year I got a bit bolder.</p>
<p>I applied for my first credit card account in hopes of establishing a credit history. At first, I was granted a $500 credit limit, but like so many other college students who bought with credit, I went too far.</p>
<p>After continuous credit limit increases, and opening a second credit card, I racked up about $5,000 in additional debt, with only a part-time job at a coffee shop to sustain my living expenses and card payments.</p>
<p>&ldquo;[Debt has] become normal,&rdquo; explains financial expert,&nbsp;<strong><a href="http://www.gobankingrates.com/debt/exclusive-interview-dave-ramsey-financial-literacy/" title="Dave Ramsey">Dave Ramsey</a></strong>. &ldquo;It is sold so aggressively that many have come to believe it&rsquo;s a financial tool. It&rsquo;s not.&rdquo;</p>
<p>With such a big misstep on my part, you&rsquo;d think I&rsquo;d know when to call my losses. Well, I didn&rsquo;t.</p>
<h3>Congratulations, You Owe Thousands on a New Car!</h3>
<p>When my 1996 Mazda Miata began threatening my safety on the road (malfunctioning airbags, broken speedometer and odometer, and transmission issues), I chose to go all out on a brand new car.</p>
<p>In hindsight, I realize it was an emotional purchase; I sat in a 2012 <a class="hidden_link" href="http://www.businessinsider.com/blackboard/hyundai">Hyundai</a> Veloster at the LA Auto Show and told myself I had to have it. Needless to say, after just a few months, I already regret my impulsive decision.</p>
<p>My approximate debt tally to-date is as follows:</p>
<ul>
<li>Credit cards &ndash; $950</li>
<li>Auto loan &ndash; $23,000</li>
<li>Student loans- $27,000</li>
</ul>
<p>The amount of debt to my name is almost enough for a 10 percent down payment on a Los Angeles home &mdash; a scary thought. So after struggling to find out how to get out of debt, I began reading up on the&nbsp;<strong>debt snowball plan</strong>.</p>
<h2>Dave Ramsey&rsquo;s Debt Snowball Plan</h2>
<p>When I first heard of Dave Ramsey, I was admittedly put off by the subtle religious overtones of his message. It didn&rsquo;t take long, however, for me to clear my reservations and really see just how much the&nbsp;<a href="http://www.gobankingrates.com/debt/why-dave-ramsey-isnt-just-for-christians/" title="Dave Ramsey Budget">Dave Ramsey budget</a>&nbsp;approach made sense.</p>
<p>As I repaid my student loans, I couldn&rsquo;t help but feel discouraged with the results. I tried tackling the debt starting with the highest interest rate, but hardly saw the balances budge even after doubling their minimum payments &mdash; even my $1,000 student loan is taking forever to pay down.</p>
<p>That&rsquo;s why it&rsquo;s these little achievements that Dave Ramsey champions in his debt management plan, and it&rsquo;s his 7 baby step approach that I&rsquo;m hoping will help me break up with debt for good:</p>
<ol>
<li>Save $1,000 as an emergency fund</li>
<li>Use the debt snowball plan (smallest to largest debt)</li>
<li>Save enough money for 3-6 months of expenses</li>
<li>Invest 15 percent of household income into a Roth IRA and pre-tax retirement accounts</li>
<li>Pay into a college fund for (future) children</li>
<li>Pay off mortgage loan early</li>
<li>Build wealth and give back to others</li>
</ol>
<p>The steps are sound advice, and they hit all the financial goals I want to accomplish. So here it goes!</p>
<p>Check back frequently to learn new debt-defying tips that can help you pay off debt, and track how well I&rsquo;m staying on the debt-free wagon.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/a-firsthand-account-of-how-i-got-my-finances-back-on-track-2011-11" >9 steps I took to get my personal finances back on track > </a></strong></p>
<p><a href="http://www.businessinsider.com/dave-ramsey-will-help-me-get-debt-free-2012-11#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/why-its-not-always-best-to-pay-off-small-debts-first-2012-8Why It's Not Always Best To Pay Off Small Debts First http://www.businessinsider.com/why-its-not-always-best-to-pay-off-small-debts-first-2012-8
Tue, 21 Aug 2012 09:24:00 -0400Jill Krasny
<p><img style="float:right;" src="http://static1.businessinsider.com/image/4eb0616969bedde830000037-400-300/snowball-snow-winter.jpg" border="0" alt="Snowball Snow WInter" width="400" height="300" /></p><p>We're not sure what to make of a <a href="http://www.marketingpower.com/AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Marketing%20Research/TOCs/SUM_2012.4/can-small-victories-help.aspx" target="_blank">new study</a> that suggests consumers should pay the smallest debts first.&nbsp;</p>
<p>In examining data from a U.S. debt settlement company, researchers from the Kellogg School of Management found that closing a debt account&mdash;regardless of its balance&mdash;predicts whether consumers will stay out debt for good.</p>
<p>The study challenges thinking we've cited before from University of Michigan professor Scott Rick.</p>
<p>"It really seems like makes sense when confronted with multiple debts to eliminate one right away," Rick said, "but there are more obscure attributes with debt, like interest rates, that make it not the right thing to do in some cases."</p>
<p>In his study, <em><a href="http://www.bus.umich.edu/NewsRoom/ArticleDisplay.asp?news_id=23284" target="_blank">Winning the Battle but Losing the War</a>: The Psychology of Debt Management</em>, Rick argued that going for the "quick win" of paying off a smaller debt first, even if it has a lower interest rate, won't work for every consumer.&nbsp;</p>
<p>In fact, it can brainwash people into thinking they're further along than they are.&nbsp;The real thing to focus on when paying off debt, he said, is a card's interest rate, which can snowball more debt over time:&nbsp;</p>
<p>"If the smaller debt carries a higher interest rate, it makes sense to follow (Dave) Ramsey's advice," he said. "When it's reversed, when the bigger debt has a higher interest rate, you should stop doing it."</p>
<h3><a href="http://www.businessinsider.com/23-secrets-to-booking-cheap-flights-2012-7">DON'T MISS: 23 secrets to booking cheap flights &gt;&nbsp;</a></h3><p><a href="http://www.businessinsider.com/why-its-not-always-best-to-pay-off-small-debts-first-2012-8#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/one-familys-journey-out-of-debt-2012-8Family Shares Their Journey Out Of $26,076 In Debt http://www.businessinsider.com/one-familys-journey-out-of-debt-2012-8
Tue, 07 Aug 2012 09:51:00 -0400Susan Johnston
<p><img style="float:right;" src="http://static4.businessinsider.com/image/4fb2a24becad04a578000017/family.jpg" border="0" alt="family" /></p><p>Back in 2008, Brad Chaffee and his wife were $26,076.75 in debt when they decided to pay it off and forsake all future loans.</p>
<p>They're now living debt-free with their three children in Charlottesville, Va., and hope to put 100 percent down on a house.</p>
<p>Chaffee's wife works part-time as a nurse and a top <a href="http://www.businessinsider.com/blackboard/ebay" class="hidden_link">eBay</a> seller, while Chaffee is building a T-shirt printing business and blogs about debt-free living at <a href="http://www.EnemyofDebt.com" target="_blank">EnemyofDebt.com</a>. Recently, they've both become health coaches.</p>
<p>[<a href="http://money.usnews.com/money/personal-finance/slideshows/10-ways-to-give-your-money-a-makeover" target="_blank">See 10 Ways to Give Your Money a Makeover</a>.]</p>
<p>U.S. News chatted with Chaffee about the sacrifices his family made along the way and why he's so determined to stay out of debt. Excerpts:</p>
<p><strong>When and why did you get serious about paying off your debt?</strong></p>
<p>In 2007, I reread The Total Money Makeover by Dave Ramsey and it just pumped me up, made me realize that now was the time.</p>
<p>In the beginning, my wife and I struggled a bit to get on the same page. My wife was in nursing school and was really focused on that while I was the one reading the books and eventually completed [Dave Ramsey's] Financial Peace University. I was a little more hard-core about how I wanted to do it, but she wasn't quite ready for all that.</p>
<p>I became aware of the fact that I was being forceful when she hadn't yet had the time to hear why we should do it my way. I was just a bit too excited and couldn't comprehend why anyone wouldn't be on board. So I backed off, realizing that I was being a jerk about it. I decided to let our progress bring her to where I was at the time, which was absolutely excited!</p>
<p>Then what she wasn't willing to get rid of and sell suddenly became listed on either eBay or <a href="http://www.businessinsider.com/blackboard/craigslist" class="hidden_link">Craigslist</a>. Watching the debt disappear motivated her and that's when we realized that we had to work on our communication and teamwork. Once we did that, we were high-speed locomotives on our way to debt freedom.</p>
<p><strong>How long did that take?</strong></p>
<p>It took us about 20 months but the first two months, January and February, we saved an emergency fund like Dave Ramsey suggests. We actually saved $2,000 instead of one because that made my wife feel more comfortable. It took us two months to save up $2,000 and then 18 months to pay off about $26,000.</p>
<p>[<a href="http://money.usnews.com/money/personal-finance/articles/2012/05/30/that-elusive-emergency-fund-why-you-need-it" target="_blank">See That Elusive Emergency Fund: Why You Need It</a>.]</p>
<p><strong>What were some of the steps you took to get out of debt?</strong></p>
<p>We kind of did it the hard way. I think a lot of people don't really want to do it the way we did it, but we cut a lot out. We almost became minimalists in a way. At the time, we really wanted to get out of debt, so we were pretty extreme in what we did.</p>
<p>We sold our $8,000 car so we were able to knock that big chunk out pretty quickly.</p>
<p>We sold stuff, we had yard sales. My wife is a big eBay fanatic, so she actually still does this stuff but we got a little more serious about eBay. To this day, my wife and I look back at that experience and we think, gosh, we learned so much and that whole debt-free journey changed us completely.</p>
<p><strong>What were the hardest things to give up?</strong></p>
<p>I've always been an avid gamer and I had an <a href="http://www.businessinsider.com/blackboard/xbox" class="hidden_link">Xbox</a> 360 and a bunch of games so I sold that and, of course, we got rid of our flat-screen television. That was hard for me, but I'd have to say that the car was probably the hardest. We didn't know what we were going to be facing once we sold that car that was so reliable for us. I ended up replacing it with an older car that looked like it came out of a junkyard. It was a crazy time for us, but we just decided to go and do it.</p>
<p><strong>According to your blog, you're planning to buy a house without taking out a mortgage. How's that going?</strong></p>
<p>We've had two houses since we've been married. We had that first house and we ended up making mistakes because we didn't know how to manage our money, we didn't know the implications of refinancing and spending your equity. We ended up doing okay, but not as good as we could have done. When we sold it, we did buy a second house and that one was the one that really kind of started to sink us a little bit. The second house, we got an 80/20 mortgage, interest only, nothing down. It was just stupid.</p>
<p>This was before our journey to debt freedom. We had a stupid mortgage and I couldn't wait to get out from under that and we eventually sold that house and now we are renting happily until we save up to buy a house. It's rather extreme for most people, but we feel like we're going to be able to prove to some people that it can be done. It just takes a little work.</p>
<p><strong>What do you think is a realistic timeline?</strong></p>
<p>We're still actually building our six-month emergency fund, so our goal is to have about $10,000 to $15,000. We're in the process of doing that. We just don't have as much money to do it as we used to, when we both worked.</p>
<p>We thought we were going to be able to do it by 2014 and then it was 2015 &hellip; But another thing is, we didn't want to sacrifice the time with our kids. That's always been the most important thing to us, which is why both of us aren't working.</p>
<p>We really believe that us raising our kids is better for them then putting them in a daycare. Even though there are good daycares out there, we just feel like we want to do it ourselves. My wife going down to part-time was a strategic move because we wanted her to be able to experience that, too.</p>
<p>[<a href="http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/05/03/7-signs-youre-getting-bad-financial-advice" target="_blank">See 7 Signs You're Getting Bad Financial Advice</a>.]</p>
<p>It's all happening, just a little slower than we expected it. But now that we've experienced what we've experienced with no debt, we don't have to make as much money to pay our bills and we don't want to go back to working two jobs and never seeing our kids.</p>
<p><strong>Some say that certain kinds of debt aren't bad. For instance, taking out student loans to further your education and boost your earning potential. What do you say to that?</strong></p>
<p>Well, the first thing I would say to that is be a student graduating in the last two to three years who has racked up all that student loan debt, and then say the same thing. There are a lot of students that are really struggling. Owing someone is owing someone regardless of how you look at it.</p>
<p>I don't look down on student loans for some things. Doctors, for instance&mdash;if none of them got student loans, then we'd probably have a shortage of doctors. But they're also in high demand, so if you go to school to be a doctor, then you're most likely going to be able to make money.</p>
<p>You can get an education without going into debt for it. I've taken classes and I'm having to do it at a much slower pace than some people, but I feel like if you can't afford something, then you shouldn't do it. If you have to go into debt to do it, then maybe you should look for an alternative.</p>
<h3><a href="http://www.businessinsider.com/23-secrets-to-booking-cheap-flights-2012-7">DON'T MISS: 23 secrets to booking cheap flights &gt;&nbsp;</a></h3><p><a href="http://www.businessinsider.com/one-familys-journey-out-of-debt-2012-8#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/steven-harell-lived-in-tugboat-2012-5This Couple Lived In A Tugboat For A Year So They Could Save Up To Buy A Homehttp://www.businessinsider.com/steven-harell-lived-in-tugboat-2012-5
Tue, 22 May 2012 11:18:00 -0400Jill Krasny
<p><img style="float:right;" src="http://static5.businessinsider.com/image/4fb6b4e569bedd115b000005/boat-ocean-blonde.jpg" border="0" alt="boat, ocean, blonde" /></p><p>Two years ago, Steven Harrell traded his bachelor pad and lifestyle in Denver for a quiet little tugboat near Wilmington, N.C.&nbsp;</p>
<p>By embracing&nbsp;<a href="http://www.businessinsider.com/what-tiny-homeowners-do-to-save-money-2012-5" target="_blank">the tiny home</a> movement, Harrell and his wife saved up enough money to purchase an actual home, and slowly became conscious spenders.&nbsp;</p>
<p>We got Harrell to share how adopting the tiny house lifestyle changed his spending and saving habits forever.&nbsp;</p><h3>Like most millennials graduating college, Harrell was saddled with debt </h3>
<img src="http://static6.businessinsider.com/image/4e53e21769beddc142000005-400-300/like-most-millennials-graduating-college-harrell-was-saddled-with-debt.jpg" alt="" />
<p><p>When he graduated from the University of North Carolina in 2005, Harrell wasn't sure what to do.&nbsp;</p>
<p>The debt wasn't exorbitant&mdash;only $10,000 in car loans and $20,000 in student loans&mdash;but his bachelor lifestyle wasn't helping his bottom line.&nbsp;</p>
<p>Between eating out nightly and blowing money on a luxury loft in Downtown Denver, Harrell had little to show for himself or his fledgling web development business.&nbsp;</p>
<p>"It just felt like for the amount of space that the place was (700 sq. feet) and with the housing market crashing, the loft wasn't worth it," he told the site. "I was really fed up."&nbsp;</p></p>
<br/><br/><h3>Stressed by the check-to-check cycle, he turned to a guru for help </h3>
<img src="http://static4.businessinsider.com/image/4f9566be69bedd6560000011-400-300/stressed-by-the-check-to-check-cycle-he-turned-to-a-guru-for-help.jpg" alt="" />
<p><p>Harrell left the loft in Denver and decided to move in with his parents until he figured things out.&nbsp;</p>
<p>One day, he spotted the Dave Ramsey book, <em>Total Money Makeover</em>, lying on his mother's dresser. Soon, he was hooked on the personal finance guru's message to <a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4" target="_blank">get out (and stay out) of debt</a>.&nbsp;</p>
<p>Harrell came up with a plan to pay off his bills, and eventually move out.&nbsp;</p>
<p><span>"I wanted to start saving up for retirement and vacations, and to have more disposable income," he said. "I wanted more financial freedom."&nbsp;</span></p></p>
<br/><br/><h3>A friend suggested he live in a tugboat to start saving money </h3>
<img src="http://static2.businessinsider.com/image/4fb6b4a1eab8ea1a0f000014-400-300/a-friend-suggested-he-live-in-a-tugboat-to-start-saving-money.jpg" alt="" />
<p><p>It sounded crazy at first&mdash;a house on the water?&mdash;but Harrell couldn't resist the opportunity to live close to Downtown and save on utilities and rent.&nbsp;</p>
<p>Another perk was that he could pay for the tugboat in cash, and never have to go to a bank for a mortgage.&nbsp;</p>
<p>"It's nice when a house is paid for, and there's many things to do on the water in Wilmington," Harrell said. "The lure was having more disposable income, but I also liked the idea of having everything in one place."&nbsp;</p></p>
<br/><br/><a href="http://www.businessinsider.com/steven-harell-lived-in-tugboat-2012-5#harrell-was-on-board-with-the-idea-but-his-wife-needed-some-convincing-4">See the rest of the story at Business Insider</a> http://www.businessinsider.com/dave-ramsey-answers-financial-questions-2012-4Financial Guru Dave Ramsey Tells Us The One Guilty Pleasure He Refused To Give Uphttp://www.businessinsider.com/dave-ramsey-answers-financial-questions-2012-4
Fri, 27 Apr 2012 10:18:00 -0400Mandi Woodruff
<p><img style="float:right;" src="http://static1.businessinsider.com/image/4f9946286bb3f72c57000011-400-300/dave-ramsey.jpg" border="0" alt="dave-ramsey" width="400" height="300" /></p><p>In a <a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4" target="_blank">three-part Q&amp;A series</a>, we've asked controversial financial guru <a href="http://www.daveramsey.com/home/" target="_blank">Dave Ramsey</a> to speak out on some of the most polarizing topics in personal finance.</p>
<p>In <a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4" target="_blank">Part One</a>, he told us what he really thinks about millennials and dished about cutting up credit cards in <a href="http://www.businessinsider.com/dave-ramsey-hates-credit-cards-2012-4#ixzz1t9LFKQxZ" target="_blank">Part Two. </a></p>
<p>Today, Ramsey weighs in on his own struggles to stay on track financially and how his die-hard fans have stuck with him this long:</p>
<p><strong><a href="http://www.businessinsider.com/blackboard/business-insider" class="hidden_link">Business Insider</a>:</strong> <strong>You're a pretty polarizing figure in the finance world, but that hasn't stopped millions of consumers from subscribing to your financial philosophy.&nbsp; What do you think sets your message apart?</strong></p>
<p><strong>Dave Ramsey:&nbsp;</strong> It&rsquo;s like going on diet.&nbsp; You know what you need to do to lose weight.&nbsp; It&rsquo;s not rocket science, you exercise more and eat less.&nbsp; Handling money is the same way.&nbsp; It&rsquo;s common sense.&nbsp; Grandma&rsquo;s way of saving for a rainy day.&nbsp; You live on less than you make.&nbsp; I can relate to the people that call into our radio show because I was once in their shoes.&nbsp; More than 20 years ago I went broke.&nbsp; I spent years digging out of my mess and learned that borrowing money was not the answer.</p>
<p><strong>BI: Everyone's got a weakness when it comes to spending &ndash; even the pros. What's the one thing you find it hard not to splurge on?</strong><br /><strong>&nbsp;</strong><br /><strong>DR:</strong> When Sharon and I were going through our lean years, I could sacrifice in just about every category except when it came to cars.&nbsp; I love cars.&nbsp; It was very hard for me to part with my Jaguar.&nbsp; I ultimately ended up in a &ldquo;bondo buggy&rdquo; until we could pay cash for a car later on.</p>
<h3 class="p2">DON'T MISS: <a href="http://www.businessinsider.com/how-the-duggars-live-debt-free-2012-4#jim-bob-credits-his-financial-success-to-two-sources-god-and-a-16-hour-financial-freedom-seminar-by-jim-sammons-1"></a><a href="http://www.businessinsider.com/dave-ramsey-hates-credit-cards-2012-4#ixzz1t9MYFHc8">How this family raised 19 kids without going in to debt &gt;</a></h3><p><a href="http://www.businessinsider.com/dave-ramsey-answers-financial-questions-2012-4#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/dave-ramsey-hates-credit-cards-2012-4Financial Guru Dave Ramsey Tells Us Why He Cuts Up Credit Cards On Airhttp://www.businessinsider.com/dave-ramsey-hates-credit-cards-2012-4
Mon, 23 Apr 2012 10:46:00 -0400Mandi Woodruff
<p><img style="float:right;" src="http://static4.businessinsider.com/image/4f9566be69bedd6560000011/dave-ramsey.png" border="0" alt="dave-ramsey" /></p><p>In a <a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4" target="_blank">three-part Q&amp;A series</a>, we've asked controversial financial guru <a href="http://www.daveramsey.com/home/" target="_blank">Dave Ramsey</a> to speak out on some of the most polarizing topics in personal finance.</p>
<p>In <a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4" target="_blank">Part One</a>, he told us what he really thinks about millennials.</p>
<p>Today, Ramsey weighs in on why he prefers his plastic shredded and some of the biggest pre-recession mistakes consumers are in danger of repeating:</p>
<p class="p2"><strong><a href="http://www.businessinsider.com/blackboard/business-insider" class="hidden_link">Business Insider</a>: After clawing your way&nbsp;<a href="http://www.businessinsider.com/these-are-the-best-credit-cards-to-apply-for-post-bankruptcy-2012-4" target="_blank">back from bankruptcy</a>, you vowed never to use credit again. You've even cut up credit cards on your radio show before. &nbsp;But in an <a href="http://www.businessinsider.com/why-the-us-is-not-a-cashless-society-2012-3" target="_blank">increasingly cashless society</a>, how can anyone make do without them? &nbsp;</strong></p>
<p class="p2"><strong>Dave Ramsey</strong>: You don&rsquo;t need credit. Credit is an &ldquo;I love debt&rdquo; score.&nbsp; If you live on less than you make, <a href="http://www.businessinsider.com/what-an-extra-dollar-can-do-2012-4" target="_blank">pay off your debts</a> and stay out of debt, you don&rsquo;t need credit.&nbsp; Think of <a href="http://www.businessinsider.com/paying-off-debt-2012-4" target="_blank">how much money you&rsquo;d have</a> if you had no payments!&nbsp; While I encourage people to save 100% down for a home, a mortgage is the one debt that I don&rsquo;t frown upon.&nbsp; And if you <a href="http://www.businessinsider.com/national-bank-transfer-day-bank-of-america-2011-11" target="_blank">deal with a local bank</a> and get manual underwriting you don&rsquo;t need a FICO score.</p>
<p class="p1"><strong>BI: Consumers are just beginning to feel more optimistic about the economy and are clearly ready to start spending again. As we near the <a href="http://www.businessinsider.com/what-face-lifts-can-tell-us-about-the-economy-2012-4" target="_blank">post-recession phase</a>, what's</strong><strong>&nbsp;the biggest mistake we're in danger of repeating?&nbsp;</strong></p>
<p class="p2"><strong>DR:</strong> Some people <a href="http://www.businessinsider.com/how-i-paid-off-24000-in-student-loans-in-4-years-2012-4" target="_blank">learned hard lessons</a> the past few years that will stick with them forever.&nbsp; But others having returned to their old ways of <a href="http://www.businessinsider.com/i-am-not-a-lena-dunham-millennial-2012-4" target="_blank">living beyond their means</a> and going into massive amounts of debt.&nbsp; It is my hope most people will be more <a href="http://www.businessinsider.com/meet-the-incredible-14-year-old-who-bought-her-first-house-2012-4" target="_blank">intentional with their money</a>, which means they do the <a href="http://www.businessinsider.com/how-to-create-an-envelope-budget-2012-4" target="_blank">dreaded &ldquo;B&rdquo; word</a>, the budget.&nbsp; You&rsquo;ve got to tell your money what to do or it will leave.&nbsp; A written budget should be done every month, on paper, on purpose before the month begins.</p>
<p class="p2"><strong>BI: What's the worst financial advice someone has ever given you? &nbsp;</strong></p>
<p class="p2"><strong>DR</strong>: There&rsquo;s not any particular advice, but I would say there was a point in my life where I tried too hard to keep up with the Joneses. But as we all found out the past couple years, <a href="http://www.businessinsider.com/true-confession-i-left-my-banker-husband-after-he-put-me-50000-in-debt-2012-3" target="_blank">the Joneses are broke</a>!</p>
<h3 class="p2">DON'T MISS: <a href="http://www.businessinsider.com/how-the-duggars-live-debt-free-2012-4#jim-bob-credits-his-financial-success-to-two-sources-god-and-a-16-hour-financial-freedom-seminar-by-jim-sammons-1">How this family raised 19 kids without going in to debt &gt;</a></h3><p><a href="http://www.businessinsider.com/dave-ramsey-hates-credit-cards-2012-4#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4Financial Guru Dave Ramsey Tells Us What He Really Thinks About Millennials http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4
Thu, 19 Apr 2012 12:03:01 -0400Mandi Woodruff
<p class="p1"><img style="float:right;" src="http://static1.businessinsider.com/image/4f90356feab8eae04f00004c/dave-ramsey.jpg" border="0" alt="dave-ramsey" /></p><p>Love him or hate him, there's no denying the impact financial guru <a href="http://www.daveramsey.com" target="_blank">Dave Ramsey</a> has had on the millions of cash-strapped consumers who tune into his syndicated radio show each week.</p>
<p class="p1">It was his advice <a href="http://www.businessinsider.com/this-mom-ditched-her-familys-89000-debt-in-six-months-2012-2" target="_blank">that inspired</a>&nbsp;<span>Angela Coffman, of Kansas City, Mo. to pay down $90,000 worth of debt in just six months and his followers (sometimes referred to as 'disciples') have likened his financial seminars to sermons.</span></p>
<p class="p1"><span></span>In a three-part Q&amp;A series, we've asked Ramsey to speak out on some of the most controversial topics in personal finance. Today, he weighs in on the generation that's <a href="http://www.businessinsider.com/hbos-girls-hits-a-little-too-close-to-home-for-millennials-2012-4#comments" target="_blank">on the tip of everyone's tongues</a> these days: Millennials.&nbsp;</p>
<p class="p1"><strong><a href="http://www.businessinsider.com/blackboard/business-insider" class="hidden_link">Business Insider</a>: There have been countless articles written on the so-called "<a href="http://www.businessinsider.com/johns-hopkins-professor-get-used-to-living-with-mom-and-dad-2012-1#comments" target="_blank">Boomerang Generation</a>," but your daughter's clearly not among them. She's <a href="http://www.kansascity.com/2012/03/02/3463814/kids-money-dave-ramseys-daughter.html" target="_blank">already following</a> in your foot steps, traveling the country to give advice to 20-somethings on staying out of debt. How did you prepare her for financial independence?&nbsp;</strong></p>
<p class="p1"><strong>Dave Ramsey</strong>: My children were taught at an early age how money works and that it comes from hard work.&nbsp; They&rsquo;ve been on a commission &ndash; <a href="http://www.businessinsider.com/40-of-parents-are-wasting-the-best-chance-they-have-to-teach-their-kids-about-money-2012-3" target="_blank">not an allowance</a> &ndash; since they were little. They learned that if they worked around the house, they got paid. If they didn&rsquo;t work, they didn&rsquo;t get paid. By the time they were teens they had their own checkbooks and lots of practice budgeting their money.&nbsp; <a href="http://www.businessinsider.com/cfpbs-college-cost-comparison-tool-2012-4" target="_blank">When they left for college</a> we knew they could handle themselves.</p>
<p class="p1"><strong>BI: The student loan debt bubble's swollen past the $1 trillion-dollar mark and students leave college today carrying an average of $27,000 in debt. What advice would you give them?&nbsp;</strong></p>
<p class="p1"><strong>DR</strong>: Before you do anything else in your life <a href="http://www.businessinsider.com/smarterbank-gives-students-cash-rewards-to-pay-off-their-student-loans-2012-4" target="_blank">pay them off</a>.&nbsp; Otherwise you will have these so long you&rsquo;ll think Sallie Mae is a family member. <a href="http://www.businessinsider.com/manage-your-student-loans-and-graduate-with-less-debt-2012-4" target="_blank">Consolidate what you can</a> and attack with intensity.&nbsp;</p>
<p class="p1"><strong>BI: Let's get more specific. Here's the kind of story we run into all too frequently here at Your Money: There's a 20-something <a href="http://www.businessinsider.com/nick-keiths-student-loan-horror-story-2012-3" target="_blank">drowning in college debt</a>. He might have a chronic health condition and all he can find is a poor-paying contract job with no benefits. What's the first piece of advice you give him to start working through the mess?</strong></p>
<p class="p1"><strong>DR:&nbsp;</strong>Take the job. And then be looking for another job with benefits.&nbsp; As far as the bills go, worry about necessities first! You need to <a href="http://www.businessinsider.com/how-to-pay-off-your-credit-cards-2012-3" target="_blank">put food on the table</a> and keep yourself healthy.&nbsp; Pay your utilities, gas and other basic needs before paying on your debts.&nbsp; <a href="http://www.businessinsider.com/the-smart-way-to-default-on-a-loan-2012-3" target="_blank">Talk to your creditors</a> and tell them how much you can pay and when, then hang up the phone.&nbsp; Once you are receiving steady income, you <a href="http://www.businessinsider.com/how-i-paid-off-24000-in-student-loans-in-4-years-2012-4" target="_blank">can clean up the student loan mess.</a></p>
<p class="p1"><strong>BI: What do you know about money that you wish you had known when you were younger?&nbsp;</strong></p>
<p class="p1"><strong>DR</strong>: That debt is not a tool.&nbsp;</p>
<p class="p1">More than 20 years ago, my wife, Sharon, and I went broke. We lost everything due to my stupidity in handling money, or not handling it, as the case may be. <a href="http://www.businessinsider.com/how-to-come-back-after-foreclosure-2011-12#keep-the-lines-of-communication-open-1" target="_blank">Hitting bottom and hitting it hard</a> was the worst thing that ever happened to me and the best thing that ever happened to me.&nbsp; We started with nothing, but by the time I was twenty-six years old, we held real estate worth over $4 million.&nbsp;</p>
<p class="p1">I was good at real estate, but I was better at borrowing money.&nbsp; Even though I had become a millionaire, I had built a house of cards.&nbsp; The short version of the story is that we went through hell and lost everything over a three-year period of time.&nbsp; We were sued, foreclosed on, and, finally, with a brand-new baby and a toddler, <a href="http://www.businessinsider.com/here-are-the-10-most-embarrassing-celebrity-bankruptcies-of-all-time-2012-2" target="_blank">we were bankrupt.</a> From there we swore we would never under any circumstances borrow money again.</p>
<h3 class="p1">DON'T MISS:&nbsp;<a href="http://www.businessinsider.com/true-confessions-how-student-loans-credit-cards-and-my-forex-trading-addiction-put-me-in-debt-2011-11#i-am-in-law-school-by-the-time-i-graduate-i-will-have-approximately-140k-of-undergraduate-and-law-school-loans-at-about-5-interest-1">12 millennials reveal how they got hooked on debt &gt;</a></h3><p><a href="http://www.businessinsider.com/dave-ramsey-weighs-in-on-millennials-2012-4#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/this-mom-ditched-her-familys-89000-debt-in-six-months-2012-2This Mom Erased Her Family's $89,000 Debt In Six Months http://www.businessinsider.com/this-mom-ditched-her-familys-89000-debt-in-six-months-2012-2
Thu, 23 Feb 2012 10:45:00 -0500Lisa M. Gerry
<p><img style="float:right;" src="http://static4.businessinsider.com/image/4f465ed2eab8ead33c000001/family-dinner-white-family.jpg" border="0" alt="family, dinner, white family " /></p><p>Six kids means more than multiplying diapers, food, clothing and toys &hellip; the dollar signs multiply as well.</p>
<p>Angela Coffman, of Kansas City, Missouri, one of the four subjects on the recent TLC special Extreme Cheapskates, was a stay-at-home mom of six, and in debt to the tune of $89,000.</p>
<p>Through extraordinary dedication, effort and big-time penny-pinching, she managed to pull her family up by its bootstraps and erase all that debt &hellip; in just six months!</p>
<p>Today, Coffman works from home, teaching others how to live frugally on her website, <a href="http://www.groceryshrink.com" target="_blank">Grocery Shrink</a>. We caught up with this reality TV star to talk about how she paid off that debt, and how she budgets to keep it off.</p>
<p><strong>What were you doing to acquire so much debt?</strong><br />My husband and I were living the American dream. We had several credit cards, but we mostly used one that gave us cash back on our purchases. We would put everything on it&mdash;food, clothing, all of our necessities&mdash;and then try to pay it back at the end of the month. We borrowed $20,000 to buy a car, we had put $75,000 down on a house that we were using as a rental property and borrowed $1,000 to buy a leather couch. Then my husband Darren, who&rsquo;s an accountant, lost his job, and we couldn&rsquo;t pay off the credit card any more.</p>
<p><strong>How did you become motivated to do something about it?</strong><br />I knew there was a better way to handle our money. My parents paid off our home when I was in the fourth grade, and they never borrowed money again. They really had taught me better. One day, I heard finance expert Dave Ramsey on the radio announcing a contest to win a trip to the Bahamas. You had to be one of the top ten families in the nation who paid off the most debt or saved the most money in a six-month period. About that time Darren got a new job, and I figured, even if we lose the contest but we give it our all, we&rsquo;ll end up winners. We won&mdash;and got to go on the trip.</p>
<p><strong>What did you do during those six months to save money?</strong><br />We went all out. We spent nothing that we did not have to in order to survive. We ate food that we picked from our yard, we turned off our heat and burned wood in the fireplace instead, we used cloth diapers, cloth napkins, cloth toilet paper&mdash;anything that you would usually use paper for. We hand-made gifts, I made clothes for the kids out of leftovers from garage sales that neighbors would give me. So my sons wore denim skirts &hellip; but they looked like shorts after I sewed them.</p>
<p>We decided to sell our house and wait for a time when we were financially able to support an investment like that. We sold some cattle that my husband owned, and we sold whatever else we could. We only kept $1,000 for ourselves. That was our only cushion between us and bankruptcy. The rest went to paying off debt.</p>
<p>By the end of the six months, we were completely out of debt. Three months later, we had actually saved $40,000 to put down on a new house.</p>
<p><strong>Tell me about the reusable toilet paper.</strong><br />It started when we were doing the contest, when every dime made a difference. But then we realized we liked it a lot better. I cut up squares of cloth. It&rsquo;s softer, lint free and doesn&rsquo;t tear up&mdash;it&rsquo;s fantastic. We were using cloth diapers at the time time, so we would just pour it all in the wash together. There were people who said, &ldquo;Cloth toilet paper, that&rsquo;s disgusting!&rdquo; I&rsquo;ve seen disgusting, though, and this isn&rsquo;t it. But, I realize there is a cultural line that we had crossed. I do buy a pack of toilet paper every year to keep in the guest bathroom or for backup. But the kids get really upset when there are no cloth wipes.</p>
<p><strong>How much do you think you save with the cloth wipes?</strong><br />Since we have eight people in the family, I would guess we&rsquo;re saving between $15 and $20 a month. And we&rsquo;ve been doing it since 2005.</p>
<p><strong>What other strategies do you still use today?</strong><br />We live in the country, and the nearest grocery store is 30 miles away, so I started going to the grocery store once a month to conserve gas. That was our transition to a whole new way of shopping. I started working on a pantry system. Instead of buying food for a week&rsquo;s worth of meals, I would buy a month&rsquo;s worth of food in one trip. At the time of the contest, I had three kids and my monthly food budget for the five of us was $185.</p>
<p><strong>And what is your budget today?</strong><br />We have six kids now&mdash;ages 12, 10, 8, 6, 4 and 10 months&mdash;so our monthly food budget for the eight of us is $400 total, $50 per person. We save $400 per month by shopping all at one time.</p>
<p><strong>Could you explain the pantry system?</strong><br />Over time, I built a pantry with a three- to six-month supply of food like tomato sauce, whole wheat flour and brown rice pasta. Now, when I go out for my monthly shopping trip, it&rsquo;s just for fresh items and the really good deals. When I see great deals, I stock up. I got to the point where I would never pay full price. If I see that tomato sauce is really cheap, I buy 30 cans. We won&rsquo;t use it that month, but I can store it for a year.</p>
<p>Also, I plan menus for the whole month. It gives me something to shoot for when I&rsquo;m at the store and I see deals.</p>
<p>(Want to save on food by planning ahead yourself? Check out our <a href="http://www.learnvest.com/tag/food-for-a-month/" target="_blank">Food for a Month</a> series.)</p>
<p><strong>What other thrifty tactics do you use?</strong><br />We only use cash. Every month, my husband I work out a budget, and whatever that is, we pull it out in cash. I have a plastic coupon organizer with tabs for categories like groceries, clothing, gifts, etc. that I use to divvy up the cash. That way when I&rsquo;m at the store, I can see at a glance if I&rsquo;m over budget. When we were putting everything on credit cards, we technically had a budget, but I couldn&rsquo;t tell how close to it we were when we were at the store.</p>
<p><strong>What about for your children&rsquo;s clothes?</strong><br />Twice a year, in the fall and spring, we plan a clothing menu for every person in the family. For example, for my oldest daughter Heidi, I will write down that she needs three pairs of jeans, two church dresses, this many socks, etc. First we look through what we already have and we write that down on the menu, so we know exactly how much we&rsquo;ll need to buy for her. We start looking at garage sales, then thrift stores, then the clearance racks at high-end department stores like Dillards. Also, Old Navy has amazing clearance racks. Then, if I still haven&rsquo;t found what I&rsquo;m looking for, I&rsquo;ll look on <a href="http://www.businessinsider.com/blackboard/craigslist" class="hidden_link">Craigslist</a> and Ebay&mdash;especially if I&rsquo;m looking for something special like soccer cleats. My last resort would be to buy it new.</p>
<p>On the TLC special, you used a babysitting club. Do you still do that?<br />Yes, we do. We trade every other Tuesday night with another family. One week their family comes over, and I provide food for their kids. The parents have four hours to do whatever they want. And the next week it&rsquo;s our turn. It&rsquo;s fantastic. Darren and I weren&rsquo;t able to eat out because it was too expensive with the children, but now when it&rsquo;s just the two of us, we can afford it.</p>
<p><strong>Do you ever splurge?</strong><br />Last year, we took our three older children on a cruise to Mexico. We found a deal at <a href="http://vacationstogo.com/" target="_blank">Vacations To Go</a>. The tickets were $250 each for Darren and me, and the children&rsquo;s tickets were $150 each. That included a week on the cruise ship and all of our food and entertainment. It was a splurge for us, but we can only go if we find a deal like that.</p>
<p>(If Coffman&rsquo;s story intrigues you, check out the story of <a href="http://www.learnvest.com/2012/02/extreme-cheapskates-meet-jeff-and-denise-yeager/" target="_blank">one married couple</a>&mdash;and fellow Extreme Cheapskates&mdash;so frugal they managed to pay for a child not their own to attend college.)</p>
<h3>More From LearnVest</h3>
<p>Check out these <a href="http://www.learnvest.com/2012/01/10-healthy-meals-kids-will-flip-for-under-10/" target="_blank">10 healthy meals</a> your kid will flip for&mdash;all under $10 each to make.<br />Take a better family photo with these <a href="http://www.learnvest.com/2012/01/the-best-photos-how-to-take-good-ones-of-your-family/" target="_blank">easy tips and tricks</a>.<br />Need a new family budget? <a href="http://www.learnvest.com/2012/01/the-makings-of-an-updated-smart-family-budget/" target="_blank">We can help you get started</a>.</p>
<h2><a href="http://www.businessinsider.com/how-i-paid-off-my-five-figure-debt-in-five-months-2012-2" target="_blank">Don't miss: How one millennial paid off her five-figure debt in five months &gt;&nbsp;</a></h2><p><a href="http://www.businessinsider.com/this-mom-ditched-her-familys-89000-debt-in-six-months-2012-2#comments">Join the conversation about this story &#187;</a></p>